Capital Utilization and the Foundations of Club Convergence

Carl-Johan Dalgaard and Jes Winther Hansen
Additional contact information
Jes Winther Hansen: Institute of Economics, University of Copenhagen

No 04-14, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: Club convergence may arise as an empirical prediction from standard neoclassical growth models where the aggregate production technology displays diminishing returns to capital. This requires that the propensity to save from wage income is greater than the propensity to save from capital income. This paper shows how endogenous capital utilization may produce such savings behavior in an otherwise standard Solow model. That is, even if households save a constant fraction of total income multiple stable steady states may arise when capital utilization is endogenously determined.

Keywords: economic growth; capital utilization; multiple eqilibria (search for similar items in EconPapers)
JEL-codes: O10 O41 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2004-11
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://web.econ.ku.dk/epru/files/wp/wp-04-14.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://web.econ.ku.dk/epru/files/wp/wp-04-14.pdf [301 Moved permanently]--> https://web.econ.ku.dk/epru/files/wp/wp-04-14.pdf)

Related works:
Journal Article: Capital utilization and the foundations of club convergence (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:epruwp:04-14

Access Statistics for this paper

More papers in EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics �ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().